News

Dollar Index Dips post Economic Data; PCE in Focus

USD

The dollar index, which measures the greenback against a basket of major currencies, faltered at a two-month high and plunged to 97.79 following soft economic data. The preliminary fourth-quarter GDP figures showed that the US economy grew by 2.1%. However, the GDP Price index came in at 1.5%, missing estimates of 1.8%, reviving fears of muted inflation. Market participants are looking forward to the PCE Price Index to be released later on the day. The US 10-year yields dropped to a four-month low of 1.532, and the EURUSD edged higher to $1.1040.

GBP

The British pound soared against rivals post the Bank of England interest rate decision. The monetary policy committee voted 7-2 to keep interest rates unchanged at 0.75%. The market was almost pricing in a 50% chance that the bank will lower interest rates by 25 basis points to 0.50%. As a result, leaving monetary policy on hold boosted pound pairs. Currently, the CME BoE watch tool is ruling out any interest rate cut in the first half of 2020. The GBPUSD rose to $1.3140, the GBPJPY rallied to 143.28, and the EURGBP dropped to 0.8390.

Metals

Gold prices retreated of an upside resistance of $1586 on WHO confidence. The World Health Organization recognized the coronavirus as a global emergency but opposed restrictions to travel and trade, easing investors' concerns. The price of a gold ounce tumbled to $1571, the price of a silver ounce declined to $17.80, while palladium futures recovered slightly to $2258.

Oil

Oil prices inched higher following the WHO announcement. The World Health Organization boosted investors' confidence by opposing trade and travel restrictions. The West Texas Intermediate crude futures rose to $53.33, and Brent futures recovered to $59.60.

Major Economic Events

GMT Country Event Expectation Previous

10:00

EU

CPI (YoY) (Jan) 

1.4%

1.3%

10:00

EU

Core CPI (YoY) 

1.2%

1.3%

10:00

EU

GDP (QoQ) 

0.2%

0.2%

13:30

US

Core PCE Price Index (MoM) (Dec)

0.1%

0.1%

13:30

CA

GDP (MoM) (Nov)

0.1%

-0.1%

15:00

US

Michigan Consumer Sentiment (Jan)

99.1

99.3


Disclaimer
 

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